Authors: Tutor: Subject:
Level and semester:
Launching a new-to-the-worldproduct
Lina Bengtsson (891221),Civilekonomprogrammet
Kristian Gjurovski (880718),Civilekonomprogrammet
Desirée Valler (880405),Civilekonomprogrammet
Sarah PhilipsonMarketingBachelor thesis VT11
Preface
When we look back at the process of writing this paper, we feel that it has been an intense and
demanding time, but also a rewarding and learning one due to the knowledge we have gained
throughout the entire process.
We would like to thank our examiner Mosad Zineldin and the other seminar groups for
creative feedback and pleasant seminars.
Also we wish to thank our tutor Sarah Philipson for all the constructive criticism throughout
the process.
We would like to thank our case-company WeZupport and especially CEO Stefan Bedin for
all the help with the case study. Finally we would like to thank all the people that took our
survey and the respondents of our interviews.
_____________________ _____________________ ______________________
Kristian Gjurovski Desirée Valler Lina Bengtsson
Växjö 2011-05-25
AbstractBachelor thesis in marketing written at the Linnæus University Växjö spring 2011.
Course: 2FE03E, 15hp.
Authors: Lina Bengtsson, Kristian Gjurovski and Desirée Valler.
Examiner: Mosad Zineldin Tutor: Sarah Philipson
Title: Launching a new-to-the-world product
Background: Innovation is something that continuously leads to new knowledge and
technologies. A vital step for an innovation is to actually launch it as a product. If the launch
would be improved, the rate of success would increase.
Purpose: The purpose of this paper is to study how new-to-the-world products could be
launched.
Delimitations: The delimitations in this paper are that issues concerning the brand,
promotion, logistics and additionally the process before the launch will not be considered.
Methodology: The research is characterized by an inductive approach. The information in
this paper was gathered by a case study, semi-structured interviews and a survey. Due to both
quantitative and qualitative research, triangulation was used.
Conclusion: There are many elements to take into account when launching a new-to-the-
world product. These elements are adoption and diffusion process, segmentation, price,
timing, power of buyers, relative advantage and compatibility. Also if first-mover-advantage
could be realized should be taken into consideration.
Suggestion for further research: Further research could involve going deeper into different
companies and finding patterns between different industries. By more people shining light
upon this subject, more views and aspects can arise, which could contribute to a broader
understanding of the concept launch.
Table of content
1. Introduction ......................................................................................2
1.1 Background ...................................................................................................................... 2
1.2 Problem discussion........................................................................................................... 3
1.3 Research question............................................................................................................. 4
1.4 Purpose ............................................................................................................................. 5
1.5 Delimitations .................................................................................................................... 5
1.6 Theoretical relevance ....................................................................................................... 5
1.7 Practical relevance............................................................................................................ 5
2. Method..............................................................................................6
2.1 Scientific approach........................................................................................................... 6
2.2 Scientific procedure.......................................................................................................... 7
2.3 Sample and population ..................................................................................................... 8
2.3.1 Case study sampling.................................................................................................. 9
2.3.2 Interview sampling.................................................................................................... 9
2.3.3 Survey sampling........................................................................................................ 9
2.4 Gathering of data............................................................................................................ 10
2.4.1 Case study ............................................................................................................... 10
2.4.2 Interviews ................................................................................................................ 11
2.4.3 Surveys .................................................................................................................... 11
2.5 Operationalization .......................................................................................................... 12
2.5.1 Triangulation ........................................................................................................... 13
2.6 Validity and reliability of the research ........................................................................... 13
2.7 Other criteria of measurement........................................................................................ 15
3. Theoretical framework ...................................................................17
3.1 New-to-the-world product.............................................................................................. 17
3.2 Launching products of innovation.................................................................................. 18
3.3 Launching for first-mover-advantage............................................................................. 19
3.4 Timing the launch........................................................................................................... 20
3.5 Strategic and Tactical decisions...................................................................................... 20
3.6 Power of buyers and uncertainty factors ........................................................................ 21
3.7 Market orientation and launch........................................................................................ 22
3.8 Pricing in the launch stage ............................................................................................. 23
3.9 Acceptance and adoption................................................................................................ 25
4. Empirical investigation...................................................................27
4.1 Introduction of the case company .................................................................................. 27
4.2 Statement of the case company’s problem ..................................................................... 27
4.3 Results from the case study interviews .......................................................................... 28
4.3.1 Market situation....................................................................................................... 28
4.3.2 Concerns about the product..................................................................................... 29
4.3.3 Introduction pricing................................................................................................. 29
4.3.4 Market acceptance................................................................................................... 30
4.4 Interviews with large online retailers relevant to the case ............................................. 30
4.6 Summary of empirical investigation .............................................................................. 36
5. Analysis ..........................................................................................37
5.1 Launching a new-to-the-world product.......................................................................... 37
5.2 Relative advantage and compatibility ............................................................................ 39
5.3 Price................................................................................................................................ 43
6. Conclusion......................................................................................47
6.1 Major conclusions .......................................................................................................... 47
6.2 Resubmitting to the control variables............................................................................. 48
6.3 Concerning further research ........................................................................................... 49
6.4 Self critics....................................................................................................................... 49
6.5 Recommendations .......................................................................................................... 49
References ..........................................................................................51
Appendix ............................................................................................55
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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1. Introduction
The introduction chapter concerns the reason for choosing this area of study, which is the
authors’ personal interest in the subject. This is when trying to launch something innovative in
situations of business-to-business. This is followed by a discussion about the problems that
might occur along the way.
1.1 Background
An innovation is defined as a product that is converted from the latest knowledge. This
product is subsequently put into use through the market or by other channels of distribution.
(Johnson et al., 2008)
Even though innovations are created, it is a long process to develop the innovation into a new
product. The new product development process ends with the market launch where the
product is launched on a commercial or/and full-scale basis. (Cooper & Kleinschmidt, 1986)
When a product is innovated, it needs to be launched into the chosen market. (Garrido-Rubio
& Polo-Redondo, 2005) A new-to-the-world product is a product that is new to a company as
well as new to a market. (Augusto & Coelho, 2009) A launch strategy consists of strategic and
tactical decisions. (Garrido-Rubio & Polo-Redondo, 2005) It is usually an expensive, time
consuming and resource costly process to handle. Hence, it is of great importance to identify
the strategy for launching. (Ming-Hung & Kuen-Hung, 2007) Strategic and tactical decisions
are vital when creating the launch process. (Garrido-Rubio & Polo-Redondo, 2005)
The strategic choices concerns decisions about being a follower or a leader, target markets and
niched or mass market. (Calantone & Di Benedetto, 2007) The tactical decisions are
influenced by the strategic choices. It is how things should be done that these decisions refer
to. (Garrido-Rubio & Polo-Redondo, 2005) It is after the new product has been completed
that these choices usually are being decided. (Talke & Hultink, 2010) If the launch would be
improved the rate of success would increase. (Garrido-Rubio & Polo-Redondo, 2005)
However, the launch management is usually neglected, when the developers send over the
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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product to the marketing department. (Calantone & Di Benedetto, 2007)
The success of products is also depending on the timing of launch, for example should an
early launch be beneficial when there is high switching cost for the customers. (Calantone &
Di Benedetto, 2007) If a product should be kept in secret or be pre-announced are also
decisions to make in the process of launch. (Guiltinan, 1999) The environment and the
structure of the industry should also be taken into consideration in the planning process
concerning launch strategy. The power of buyers is an example of what affects the
performance of a company. When the launch strategy is being created, considering the
uncertainty factors needs to be addressed. (Calantone & Di Benedetto, 2007)
The launch tactics and final result is affected by a company’s degree of market orientation,
which is how the company creates, spreads and react to information of the wants and needs of
the customers. (Calantone & Di Benedetto, 2007) The social and technological capabilities of
resources and the character of the market is what innovative products launch strategies are
depending on. (Ming-Hung & Kuen-Hung, 2007)
1.2 Problem discussion
One important factor concerning the tactical decisions is the choice of price. (Garrido-Rubio
& Polo-Redondo, 2005) The price is a major issue of launching. A price reduction, market
penetration, could be made to lower the risk in the trial stage if there are barriers based on
adoption. However, the disadvantage with lowering the price is that the revenues are reduced
if the cost does not fall quickly. However, the higher price of the price strategy skimming
could make the revenues to the highest, but it needs to be justified by other elements, for
example the quality of the product. (Calantone & Di Benedetto, 2007) Another issue in
launching is if a first-mover-advantage could be realized. This advantage can be realized,
when customers think firstly of that company, creating an emotional bond. However, this first-
mover-advantage does not have to correlate with success; superior competitors can still out
manoeuvre the company in different ways. (Liang et al., 2009)
When launching a product, the behaviour of the customers needs to be stimulated. When it
comes to products that are new-to-the-world, the process to focus on would be adoption and
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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diffusion. (Guiltinan, 1999) The process of adoption is the number of stages that a consumer
goes through in order to adopt a product. (Solomon et al., 2010) The spreading of a new
product in varying degree and velocity in a market is called the diffusion process. (Johnson et
al., 2008) When the launch strategy will be chosen, it is how the market would accept the
product that one should bear in mind. This is since a launch plan that stimulates the process of
adoption could lead to the stadium of diffusion. (Guiltinan, 1999)
Issues that refer to preparing and positioning on a market are to a large extent concerning
technological products. (Ming-Hung & Kuen-Hung, 2007) A vital factor for launch of
technological products is the arrangements of distribution that should be unique. (Beard &
Easingwood, 1996) Launch of high innovativeness products is what companies that offer
high-tech products might turn away from. The competition becomes more aggressive when
the market acceptance increases. The entire strategy, when this happens, falls apart because
the typical launch strategies will not resist rivalry. (Ming-Hung & Kuen-Hung, 2007)
High cost when educating the market is what companies that take the position of a leader will
be involved with. (Guiltinan, 1999) However, the economy of scale can be beneficial due to
better quality and lower cost. (Kalyanaram et al., 1995) Furthermore, this could be an
advantage of being a first-mover. (Guiltinan, 1999) If the prices and quality of an offer is not
being seen as satisfying, a backward vertical integration can occur. (Johnson et al., 2008)
WeZupport’s main problem is to adapt the launch to an immature market. There is a threshold
holding the demand back that could be surmounted with strategic and tactical decisions. A
problem is that the users of the digital shopassistant are indeed ready for this solution but the
business sector is holding the development back. Although the market is immature, this will
eventually change and therefore WeZupport wants to be the first-mover. This complex
situation requires an innovative launch strategy to be able to overcome these thresholds.
1.3 Research question
”When trying to launch a new-to-the-world product in a successful way, how should the
launching plan be designed?”
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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1.4 Purpose
Our purpose is to study how new-to-the-world products could be launched.
1.5 Delimitations
Issues concerning the brand, promotion, logistics and additionally the process before the
launch will not be considered in this paper.
1.6 Theoretical relevance
The theoretical relevance of this paper is to study the strategic launch decisions, such as a).
first-mover advantage, b). the choice between mass market or segmentation, and c). the
tactical price decision at launch. The stages compatibility and relative advantage in the
innovation decisions process are also part of the study. We want to study if existing theories
can be validated in a case study. It is especially if the relative advantage and compatibility in
relation to specific launch tactics could be further validated through empirical investigations.
We also strive to identify phenomena that have yet not been given any theoretical explanation.
1.7 Practical relevance
The practical relevance of this paper is to investigate how a new-to-the-world product could
be launched. It will therefore contribute to guidance, not only to our case company, but also to
other businesses in the same situation.
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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2. Method
The following chapter describes how the research was completed in the different stages. It
describes the scientific approach that the authors have used and the sample and population of
the research. This is followed by the different empirical gathering methods and
operationalization and also the criteria of measurements.
2.1 Scientific approach
Positivism is a widely used way of looking at science. This approach says that specific
methods are used when social happenings are being researched. (Saunders et al, 2009) A key
point of positivism is that only happenings that the senses can confirm can be accepted as
knowledge and that these have to have both a deductive and inductive approach. (Bryman &
Bell, 2005) What this means is that the objective of the theory is to build different hypothesis
that will be tested in real life. (Saunders et al, 2009) Science portrayed as positivism, should
be objective and free from any type of influences. Nevertheless, at the same time, a difference
is constructed between scientific and approached statements. Only the scientific statements
are then approved since the approached ones cannot be processed through a persons’ thought
of mind. (Bryman & Bell, 2005)
Hermeneutics is an approach where you study, interpret and try to understand the foundation
of the human existence. It is many times called the opposite of positivism. (Bryman & Bell,
2005) Traditionally, it is a method to interpret different kinds of texts, but the fashionable
hermeneutic approach also includes that actions by humans can be interpreted in the same
way. (Lichtman, 2010) As time has passed, hermeneutics has been seen more and more as an
open, subjective science approach, where it stands for a qualitative understanding and
interpretation. This way of looking at science is expressed by researchers’ first tries to
understand the whole picture, while then trying to see different parts for themselves. As the
interpretations are emphasized, the significant difference is stressed in every interpretation to
show how many different interpretations are considered to give more value to the research.
(Patel & Davidsson, 2003)
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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In this paper, the hermeneutic approach is used. This is since the authors not only accept the
knowledge derived from senses, instead subjective aspects of the qualitative respondents will
also be taken into consideration. Furthermore, the gathering of data is partly done by a case
study where the case company’s subjective view is of significance. In addition, also
individuals that are not part of the case company will be a part of the research. This means
that a subjective and unique situation of relevance for this paper will be investigated. The
paper will also show on deeper level different co-incidents that can be found in the theory that
can be seen in the actual case, if there are any at all or not.
2.2 Scientific procedure
The deductive method is a method that is popular way of interpreting. Simply described, the
thought is to find theories that seem relevant, and figure out different hypothesis that later on
can be investigated by research. (Holme & Solvang, 1997) The last part is also the hardest
one. Finding different hypothesis is a great challenge, and an even greater one is to understand
them and putting them to use. If successful in doing this, these hypotheses can contribute to
the known theory by being confirmed or discarded. (Bryman & Bell, 2005) In this method,
the researcher starts by investigating the subject on a general level and later focuses more and
more on a primary topic. Another method is the inductive one. (Lichtman, 2010) This can be
described as the complete opposite to the deductive method in the way that in inductive
research, theory becomes the result of the research. (Holme & Solvang, 1997) Many times,
researchers take on a study because the current theories do not exist, or do not explain the
subject in a proper manner. The inductive method do not test hypothesis as in the deductive
method. Instead, this method is used when gathering information with the purpose to create
theories, hypothesis or concepts. (Merriam, 2009)
This research is done with an inductive tendency judging by the type of research that will be
done. This is because the question was formed along with the process, and then the actual
research was done parallel to this. Thereby, a hypothesis was not used in this paper and
therefore this paper did not use a deductive approach. Theories that were relevant for the
paper were used to see if they could be applied to the case the paper investigates. Research
was conducted with a real scenario case study to see how praxis and theory correlates between
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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each other.
2.3 Sample and population
A population is people in a specific area. Area here could, for example, mean all the citizen in
a country but it could be anything. It is all the people we would like to know more about.
(Holme & Solvang, 1997) There are two methods to sample the population, the non-
probability sampling and the probability sampling. The sampling method non-probability
sampling gives a less secure and qualitative result than what a probability sampling does, but
a non-probability sampling is a more economical and practical choice. (Lekvall et al., 2001)
One type of non-probability sampling is the comfort sampling. This sampling method does
not use a statistical sampling even though the research in reality should make use of one.
Reasons for the choice of not using a random could be limits within the areas of time, finance
and practicality. One way to perform a comfort sampling is to focus the research on accessible
groups even though the target population for the research is wider, as for example using
research groups as customers of a company or employees in a company. Another way could
be to pick out individuals to participate in the research when standing in a place where many
people pass by. However, when using these methods the participants will most likely be
different from the more relevant research group for the study. This will probably give the
research a distorted sampling since some people in the target population have lesser chance to
be included in the research than others from the same target population. Because of these risks
of error, the comfort sampling method is not to be recommended if it is possible to use other
sampling methods. (Lekvall et al., 2001)
The empirical investigation has been approached through a comfort sampling, since we had
limited time, finance and practicality. This means that the participants may not be the most
relevant for this research. In addition, the result is not representative for the different
populations used in this study. However, the main thought was not to generalize to the
populations, but instead to shine light upon the subject for further research. Even though the
results of this study can not be fully generalized, we still believe that we will be able to
indicate on trends that refer to the whole population if the samples are similar to the
population. To avoid the sample from differing from the population, we will use control
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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variables. This means that the sampling must fulfil the requirements of the control variables in
order for us to be able to make conclusions about all populations even though the result will
not be completely generalizable. We will try to meet the control variables, however, due to the
comfort sampling when doing the survey over the internet, the authors loses some control
over the respondent age, gender etcetera since anyone can answer it.
2.3.1 Case study sampling
The case company used in this paper was chosen by its present situation that is in the pre-
stage of launch. In addition, the case company fulfils the requirements needed to shine light
upon the theory new-to-the-world product that will be launched into a new market. The
population of this case study is innovative companies that want to launch a new-to-the-world
product.
2.3.2 Interview sampling
The qualitative interviews consist of four companies that sell products and services online in
four different markets. The markets chosen were travel, clothing and make up, technology and
cultural products. The reason for choosing these markets is that these are large in the areas of
products and services that people shop for online that WeZupport aim to segment towards.
(Bedin, CEO, 2011) These types of companies make up the population for these interviews.
The segment travel is represented by the company Ving Sweden, the segment clothing and
make up is represented by a company that wants to be anonymous, the segment technology is
represented by Siba AB and the segment cultural products are represented by Ticnet. Every
interview was made with the head of marketing in each company since these people were the
most relevant to this research.
2.3.3 Survey sampling
The quantitative data of this paper was gathered from a survey that the potential end-users of
the case company’s' concept have filled out. These people might potentially be the customers
of our case company's customers. These were reached by an electronic survey distributed on
the social media Facebook and through email. The survey included 250 people, with a
dropout of 10 percent. This dropout was due to incomplete surveys and incorrectly answered
questions. The population of this survey is in general people that shop on the Internet.
Furthermore, the respondents may not represent the population, which makes the process of
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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generalization difficult. However, due to control variables, there is a chance to be able to,
despite this, indicate on trends.
According to SCB (2009) the share of people that bought something from internet April 2008
to March 2009 was 63 per cent of the population of Sweden. (SCB, 2009) The age group that
shopped the most was people between the ages of 25 to 34 years. Men were shopping online
slightly more than women during this period of time. (SCB, 2010) In order to verify these
control variables to make sure that the respondents do not differ from the population that is
intended to measured, some questions were added into the code of conduct. These questions
were if the respondent has shopped online, the age and the gender.
2.4 Gathering of data
The gathering of data in this paper has been operationalized by conducting a case study,
surveys and a few interviews. With this empirical information, the phenomenon studied will
give value to the theories.
2.4.1 Case study
A case study is when something is investigated detailed and throughout. (Lichtman, 2010) A
case can involve a phenomenon, a situation, an organization or a company. The most vital part
of a case study is to study something unique or a special environment. A case study is in most
cases put in the qualitative shelf due to its nature. (Lichtman, 2010) Different kinds of
interviews suit this kind of research well and that is why a case study many times is called
qualitative research, but many times a combination of both qualitative and quantitative
research is involved in the case study. (Lekvall et al., 2001)
The case study performed in this paper is mainly of a qualitative manner. Most of the
information came from the semi-structured interviews that were performed. These interviews
were done to be able to go as deep into the case as required. They were performed over
different information channels such as social media and chat. The information gathered comes
from people in the example company that were relevant to discuss the purpose of this paper
with. Information also came from the case company website.
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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2.4.2 Interviews
A way of conducting an interview is the unstructured interview. A key advantage of this type
of interview is flexibility that the interviews give on the expense of the time-consuming
nature of the interviews. Qualitative interviews are characterized by the first questions being
general ones and focuses on the interviewers own conception and position. The interviewer
wants to get as deep and detailed answers as possible. (Lichtman, 2010) A negative side of the
interviews is that they are fairly expensive to conduct, but still, the depth of the empirical
information compensates that issue. (Christensen et al, 2001) With an interview of this sort, it
is suitable to let the interview move in different directions, because it lets the respondent
choose what it is important. (Bell, 2010) The interviewer has then the choice to diverge from
the questions to ask a follow-up question. These features make the interviews flexible due to
the fact that the interviewer can modify the interview along the way. This type of interview
with specific questions that can be answered in random order is called an unstructured
interview. (Bryman & Bell, 2005)
The slightly different way of conducting an interview is the semi-structured way. This type of
interview is more uncomplicated to analyze and summarize than the unstructured type. (Bell,
2010) The semi-structured interview is conducted through following questions of a general
type. Generally the questions are developed to be used for several different respondents.
However, the questions can also be varied to fit the different situations of the respondents.
This type of interview is many times preferred by many researchers. (Lichtman, 2010)
During interviews a semi-structured way of conducting has been used. The authors had a set
code of conduct on the specific questions and then the respondent could speak as freely as
possible. The regulation of the questions was flexible when needed, this to get a freer
interview structure. In some cases the respondent wanted to elaborate on something, and then
this option was available. In those cases where one or two questions were asked at the same
time, the code of conduct was to be followed and both questions were asked. During the
interviews extra questions did arise. These were then included in the code of conduct.
2.4.3 Surveys
The survey consisted of structured closed questions. The questions that were asked in the
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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survey were chosen by the authors themselves to go hand in hand with both the theories
chosen, but also with the empirical information. A more developed description of how and
why the specific questions were asked is described in the appendix 3 of this paper, together
with the survey itself.
Bryman & Bell (2005) points out that the negative part with closed questions is that there is
no opportunity to engage and study follow-up questions. Another issue can be that the person
filling out the survey interprets the question in one way, while the authors meant it in another.
(Bryman & Bell, 2005) On the positive side, the surveys are easily replicable when the
questions are exact and no variation in the answers can occur. (Groves et al, 2004) This also
should verify that the surveys can be used on different selections of population. The numbers
of questions were on a relatively low level, due to too many questions might yield a higher
drop-out rate. This gave relatively extensive empirical information, which could be analyzed
with theoretical studies. (Bryman & Bell, 2005) Before the surveys were distributed, they
were tested to find any potential issues with them.
2.5 Operationalization
When the step is taken from theories to empirical information, the researcher faces many
obstacles. This is where the theoretical information has to be connected with solid community
praxis. (Potter, 1996) The issue here is that it can yield problems of a communication
character. Even if the researchers have made an operationalization of their theoretical
framework, which they found interesting and relevant, the aspect of other researchers finding
the framework equally relevant cannot be foreseen. (Holme & Solvang, 1997) The
operationalization starts with the theoretical information that has been gathered, in other
words, with the more or less complex pictures of different relationships that the researcher
would like to investigate. These theoretical concepts have to be precise and be given a
univocal meaning and the more univocal they can be, the more precise answers will be
obtained. Even if the desired answers are found, this is still a problem. It is vital if the
operationalization will be perceived as fruitful, and not only fruitful to the researcher, but to
everyone in the study. (Holme & Solvang, 1997)
This paper includes research from both quantitative and qualitative information in the shape
Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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of surveys, interviews and a case study. The survey covers the case company’s situation and
addresses the experience of Internet shopping from the potential users of the case-company’s
product point of view, to see if the information from the company is reliable. Interviews are
done with companies that are working in the field of the example described in the case-
company. The last research source, the case study, is an example of when a company is trying
to launch an innovative product. The operationalization has laid the foundation for the
empirical research, which should give a higher credit to the entire paper and in the end an
answer to the research question. The process of operationalization is attached in the appendix
as appendix 1, 2 and 3.
2.5.1 Triangulation
Triangulation is a word that aims to describe the relationship between quantitative and
qualitative research when dealing with a phenomenon. It was first understood as a strategy to
verify the results that different methods produced. It can also be understood as a tactic to give
the qualitative research a higher quality, but also a way of conducting qualitative research in
an appropriate manner. (Flick, 2009) This method combines several methods of information
collection to be able to get more findings. Especially when time is of the essence,
triangulation is an effective way of getting several aspects on the studied phenomenon by
using different methods. The used methods can later be examined to see what method found
which finding. (Bell, 2010)
This paper has gathered information from several sources. The qualitative data comes from
interviews with companies relevant to the case and with the case company itself. The
quantitative information comes from surveys that respondents relevant for the case filled out.
The theoretical information was the foundation of the paper for the authors to be able to get
wider knowledge about the purpose before starting research to answer the question of the
paper.
2.6 Validity and reliability of the research
When conducting research on this level, it is vital to be able to look at certain criteria that
must be fulfilled to give the research credibility. Validity and reliability are two important
criteria for crediting research that are being used frequently. What these mean are quite
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different from one to another. Reliability can be found in the research if the research can be
re-done at a different time. If the research shows differences from the first time, the criterion
of reliability is not met. (Bell, 2010)
For this reliability criterion, the authors have tried to be as consistent as it is possible to be. If
the same research is done at a later occasion, the results may turn out the same, but we have
kept in mind, that situations and prerequisites changes over time which affects the research
and the result of it. In this criterion the research can be redone in a different time and then get
the same result if the research follows the operationalization and uses the same sampling
choice with the same control variables. We believe that reliability is met to more extent in the
quantitative research than in the qualitative research. This is since the answers from the
quantitative research we gained, will be of the same type in a later context, since there are pre-
stated answer choices. However this is not concerning the why/why not questions. Qualitative
interviews give answers in a broader scale and therefore the reliability is not as high as it is
for the quantitative approach. The reliability will be met since the sampling of the population
will not be different from a new sample in a further research due to control variables. This is
since our samples do not differ from the population that we are studying.
The validity criterion is rather different from reliability. It is concerned with seeing how the
results have been derived from the research. (Bryman & Bell, 2005) It also concerns actually
measuring what was intended from the beginning. (Lekvall et al. 2001) An example of this is
if you would like a yes or no validity is hard to get in especially quantitative research, since in
this type of research has a greater distance to the source of information. (Holme & Solvang,
1997)
As the validity criterion is about if what was intended to be measured really is measured, we
kept that in mind when constructing the research question. This since the research question
gives guidance to a further research. Therefore, to be able to avoid a conducting of a skew
reflection of the empirical area of study, the research question needs to fit what is intended to
be measured. Furthermore, even the sampling choice is affecting if what is intended to be
measured really is measured. We tried to make sure of this when we used control variables in
our choice of comfort sampling. To make sure that the questions used in the empirical
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investigation are designed to measure what is intended to be measured, an operationalization
is used where the questions are addressed with theoretical aspects. When it comes to this
criteria, the research done must have a clear connection with the rest of the paper and,
especially, with the purpose of it. We believe that validity will be higher in the quantitative
research than in the qualitative research. This is because of what is intended to be measured
are subjective opinions from our sample. In a qualitative approach, subjective opinions are
given a wider space than the quantitative approach that is given limited space in shape of pre-
decided answer choices.
As a summary, in the quantitative approach the validity is high while the reliability is lower.
This is while the reliability is high in the qualitative approach while the validity is lower.
2.7 Other criteria of measurement
Besides the two criteria mentioned above, there are several others that can measure different
aspects of the research. These are transferability, confirmability, credibility and dependability.
The former one, transferability, is to which extent the result can be generalized when it comes
to relocating to another environment. Confirmability is referring to which extent others can
confirm or verify the result. (Lichtman, 2010) In addition, the researcher should reassure that
it is in good faith, which the researcher has acted in. This is with the insight that a complete
objectivity is not possible to achieve when it comes to science regarding social issues. This
good faith refers to that it is not by conscious that the researchers’ theoretical orientation or
values has been affecting the researches execution. (Bryman & Bell, 2005)
The next criterion, credibility, involves the evaluation of credibility from aspect of the
members of the study which means that the attendants of the research can credit the situation
for being reflected in a proper manner. Dependability is when the researcher takes into
consideration that changes can occur within the area of research. The researcher also has the
responsibility to make sure that the changes are being fully described as well to describe how
these affects the execution of the research. (Lichtman, 2010)
To follow these criteria the authors have tried to be as consistent as possible. The respondents
have been told to be as open as possible and to answer sincere. This is strengthened by the
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possibility of being anonymous, that was offered to the respondents. The purpose of the
research has always been presented and all information has been written down in some form.
All respondents have been relevant in some way for this paper and the authors have tried to
find the most suitable respondents for the research to be able to answer the research question.
The criterion transferability is not met in this paper due to the choice of comfort sampling and
therefore the result is not possible to generalize. The other criterion confirmability is partly
met when the case company verified the interpretation that the author did from their
statements. Why the paper partly failed to meet this criterion was because of the large retailers
of internet shopping, who were interviewed, were not offered the possibility to verify the
answers due to the lack of time. The authors of this paper have not consciously merged their
own opinions into the research and therefore have been acting in good faith. This strengthens
the level of confirmability in this paper, even though the authors might have affected the
research unconsciously, since complete objectivity is not possible to achieve. The
understanding and interpretation of the authors has influenced the different chapters of the
paper, even though the focus has been on keeping the information as useful as possible.
Furthermore, since the case company is the only one verifying that the information has been
interpreted in a proper manner, the criterion credibility is not fully met. The last criterion used
in this paper, dependability, is met since no changes have occurred during the research.
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3. Theoretical framework
In this chapter, theories that are relevant to this paper are presented. This information will
later on be the foundation for an analysis of the subject.
3.1 New-to-the-world product
A product that is new to a market, as well as new to a company is called a new-to-the-world
product. (Augusto & Coelho, 2009) New-to-the-world products have a high complexity to
launch. The company needs to construct a demand that is called primary demand. (Guiltinan,
1999) Primary demand is where buyers are positive to buy a product no matter what brand
they find. That demand is often wanted in the first stages of the products lifecycle. (Solomon
et al., 2010) In primary demand situations, cost of switching can occur when a substitute to
the product gets attention. (Guiltinan, 1999)
A launch plan must be made of the needs to be stimulated in an area of customer behaviour;
the processes of diffusions and adoption. The adoption phase will take time, due to that the
time and cost of the customers, when making their buying decision. (Guiltinan, 1999) In the
process of adopting a new product the buyer passes through different stages, including
information search, evaluation, trial and finally adoption. The importance of these stages
depends on how much information the buyer already has about the new product. (Solomon et
al., 2010) This process of adoption, with a launch plan that stimulates this process, will turn
into the stadium of diffusion. (Guiltinan, 1999) The diffusion process is where innovations
spread across the market in varying velocity and degree. (Johnson et al., 2008) When reaching
a group of early users they become opinion leaders. (Ming-Hung & Kuen-Hung, 2007)
Opinion leaders are persons that are leaders and gives information to others in areas as, for
example, consumption. An often used definition for opinion leaders is persons who tend to
sway other individuals’ choices when it comes to purchases. These opinion leaders help
spreading the product across the market. Persons that are recognized as opinion leaders often
have features as being both socially dynamic and technology knowledgeable. Other examples
of features are self-assurance and egocentrism. (Shoham & Ruvio, 2008)
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3.2 Launching products of innovation
The launch of a new product involves high risks and expenses. (Hultink et al., 1997) Hence,
the concern is to identify what type of strategy to use for a product launch. (Ming-Hung &
Kuen-Hung, 2007)
Figure 1 Source: Ming-Hung & Kuen-Hung, 2007 P495
In Figure 1, a theoretical framework is showing the launch strategy of innovative products as
depending on the character of the market and the recourses of social and technological
capabilities. The characteristics of the market are referring to competition and market growth.
The technological capability is referring to research and development and technological
knowledge. (Ming-Hung & Kuen-Hung, 2007) A technological capability establishes a
competitive advantage. (Duysters & Hagedoorn, 2000) The social capital could be strategic
alliances and reputation. (Ming-Hung & Kuen-Hung, 2007) The capital of a social kind is
also referring to, partnerships with emotions of trust and attachment that is mutual. The
interaction among partners, can take the shape of using resources that are a part of social
capital. The performance of a company is what the social capital embraces due to social
networks valuable effect. (Lee et al., 2001) These are of significance when a launch strategy is
being selected. (Easingwood & Harrington, 2002)
Technological products encounter more issues concerning preparing and positioning on the
market. (Ming-Hung & Kuen-Hung, 2007) Creating unique arrangements of distribution are
vital for a launch, when it concerns a technological product. These arrangements might be
new dealership of joint-venture. This joint-venture could also take the shape of cooperation of
technological evolvement. (Beard & Easingwood, 1996) However, companies offering high-
tech products might turn away from launching products with a high level of innovativeness.
When the market acceptance increases, competition becomes more aggressive. When this
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happens, the typical launch strategies will not resist rivalry and the entire strategy falls apart.
(Ming-Hung & Kuen-Hung, 2007)
3.3 Launching for first-mover-advantage
The newness of a product is affected by the decisions between being a follower or a leader,
and this also affects the demand that the company wants. When a company takes the position
of a leader, they must educate the market, involving high costs. (Guiltinan, 1999) Companies
that strive towards being the first-mover should only do so if they have the proper resources
and skills, as well as the willingness to practise a strategy based on both high risk and return.
Companies with limited finances and a low willingness for taking risks should not strive for
being the first-mover. (Kalyanaram et al., 1995) However, there are possible advantages in the
long run with early gained consciousness, distribution and trial. (Guiltinan, 1999) This is
referring to the segment of the market that is greatest and largest. In contrast, companies
entering later should target smaller segments. (Kalyanaram et al., 1995) When, due to
increased compatibility and relative advantage the market acceptance is quicker, the benefits
of being the leader are greater. (Guiltinan, 1999) The factor compatibility depends on the
values and needs of the customers that should be matched to the products position and to the
comparison between this and the match of other products that have been tested earlier. (Sang-
Hoon & Sungjoon, 2004) The factor relative advantage depends on the position advantages of
a product, compared to the performance and price of the innovation or compared to the ideas
that the new product refers to replace. (Rogers, 2003) These two factors have influence on
customers’ intentions of acquisition. (Sang-Hoon & Sungjoon 2004)
The first-mover-advantage could make the product and company to what the customer first
spontaneously thinks of. As long as customers’ needs are being fulfilled, there will be a
resistance to change, since the relation between the customer and the company creates a bond
founded on emotions since the first-mover is the first to satisfy the customer. However, being
first does not mean that the product will succeed. In markets where products evolve rapidly
and a lot of technical advances are being made, being the first-mover can be an exposed
position. Exposed, meaning that competitors with superior resources, as for example well
known brands, more efficient products or greater capabilities, have an advantage whereby
they could take over. (Liang et al., 2009) Companies that would gain advantage from being a
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first-mover would be those who attain better experience economies and scale in short time,
thus establishing a durable advantage in competition. (Guiltinan, 1999) This economy of scale
can give advantages, such as a lower costs and better quality. (Kalyanaram et al., 1995)
3.4 Timing the launch
Another important aspect in product launch is the timing of the launch since it affects the
success of products. If there are high switching costs for the customers, early launch is
advantageous. (Calantone & Di Benedetto, 2007) Pre-announcing could be a way to create
hype before actually launching the product. The product should be pre-announced in cases of
high relative advantage and low compatibility. This is while the product should be kept secret
until launch in cases of high compatibility and low relative advantage. (Guiltinan, 1999)
Calantone & Di Benedetto (2007) states that by launching a product early helps to create a
reputation for the product. Guiltinan (1999) says that if the customers find the relative
advantage to have some substance, it would help to build a reputation. Pre-announcing
creates an approval, when there is a new standard. It also gives consumers additional time to
change systems that are interrelated and to get an understanding of the technology. (Guiltinan,
1999) When customers need to learn a new technology or new systems, the launch should be
early. The appropriate launch time could be based on the customers and the company’s goals.
(Calantone & Di Benedetto, 2007)
3.5 Strategic and Tactical decisions
The decisions of launch can be divided into strategic and tactical decisions. (Ming-Hung &
Kuen-Hung, 2007) The strategic decisions, addresses why, when, what and where to do it.
(Hultink et al., 1997) These decisions are going to have an impact in the long run. (Garrido-
Rubio & Polo-Redondo, 2005) The strategic decisions are made in the early stages, where the
product is developed, and followed through the whole process. (Hultink et al., 1997) The
strategic choices influence which tactical decisions that will be made before the launch of the
new product. (Garrido-Rubio & Polo-Redondo, 2005) The choices of target markets, mass
market or niched market, or being follower or leader, are strategic choices. (Calantone & Di
Benedetto, 2007)
Tactical decisions concerns how things should be done (Garrido-Rubio & Polo-Redondo,
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2005) and choices at this level are usually being decided when the new product is complete.
(Talke & Hultink, 2010) Decisions of the tactical kind can be about price. (Hultink et al.,
1997) How the product would be accepted, depends on how the strategic and tactical launch
decisions are implemented. (Garrido-Rubio & Polo-Redondo, 2005)
3.6 Power of buyers and uncertainty factors
When it comes to the planning process of the launch strategy, managers should take into
consideration the environment and the structure of the industry. How a company performs is
affected by, for example, the power of buyers. (Calantone & Di Benedetto, 2007) Power of
buyers is when there is a pressure to achieve profit, as a consequence of the power of bargain
that the buyers hold over the supplier. Buyers have a tendency to have power when they can
be their own suppliers when having potential to obtain facilities of their own or if they already
possess them. (Johnson et al., 2008) This means that there is an implicit threat that the buyers
themselves can do the job of the supplier. That would be a backward vertical integration.
(Porter 1980) This backward vertical integration can be a consequence of that the quality and
prices of the offerings of the supplier are not being seen as satisfying. This situation is called
buyer competition threat and is a part of the power of buyers. (Johnson et al., 2008) When
there is a chance for a backward vertical integration, the power of buyers would probably be
high. (Porter 1980)
Some uncertainty factors need to be kept in mind when the launch strategy is being
developed. (Calantone & Di Benedetto, 2007) Uncertainty is defined as a defect of
information, and is referring to the disparity between the information the company possesses
and the information needed for a specific performance. (Büyüközkan & Feyzio�lu, 2004)
Some examples of uncertainty factors are the market demand and technology. (Calantone &
Di Benedetto, 2007) It is not easy to create sustainable technological advancements that will
survive technological turbulence and due to this, a quick decision making process is
necessary. Moreover, it is not easy to predict the time when changes of a technological kind
will occur. (Augusto & Coelho, 2009) In the case of a low market uncertainty, the product is
being sold and distributed in well-known distribution channels. The information on customers
that the company possesses is also extensive. However, this is not the case in situations of
high market uncertainty, where the information of customers is low. In a market that is
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quickly changing, companies encounter uncertainty. One is that the potential buyers may not
be able to express their needs. Neither do managers have full information about the
opportunities of the new technology. (Büyüközkan & Feyzio�lu, 2004)
3.7 Market orientation and launch
It is also important that the company is market oriented, as this affects the final result and the
launch tactics. A definition of market orientation is that the company creates information of
the wants and needs of the customers and spreads the information and reacts to it. (Calantone
& Di Benedetto, 2007) A major decision is to choose between targeting the entire market or
selecting a niche to focus on. (Guiltinan, 1999) Improving companies’ profitability and
competitive advantage by improving customer orientation will lead to market segmentation
that also develops these advantages. However, advantage concerning segmentation need to be
balanced with resources. These resources refer to the resources that are connected to the
execution of the segmentation. However, the segmentation projects could be full of difficult
issues even though the cost has been justified. (Dibb & Simkin, 2009) This development of a
competitive advantage is founded on knowledge about the chosen segment. When choosing a
segment, it should match the strengths that the company possesses. (Croft, 1994)
The process of recognizing the target groups is where target customers are identified and
segmented into groups. These groups contain customers that have demands of a similar kind.
This focus is needed to increase the efficiency of pleasing and attaining the customers. The
decision of the target market to focus on is one of the most significant decisions to do. (Talke
& Hultink, 2010) In most cases, targeting the entire market is not preferred, due to heavy
competition from superior competitors. To be able to compete in this situation it is required a
large amount of resources. (Guiltinan, 1999) When targeting the entire market there is also the
risk that some needs of customers are not satisfied and resources are being wasted. (Croft,
1994) However, targeting the entire market could be preferable when the product will be seen
as having great compatibility and powerful relative advantage. This is in the case of a wide
range of customers. However, in the reality, new products seldom attract all new potential
customers. Instead, they often target those who probably would be appealed by the advantage
of the product. These are segments that are of strategic significance. (Guiltinan, 1999)
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3.8 Pricing in the launch stage
A significant factor in the launch stage is the price. (Calantone & Di Benedetto, 2007) From
the customers’ point of view, the price is a vital element in the desire for a product. The price
also indicates the advantage, innovativeness and quality of the product. (Hultink et al., 2000)
There might be adoption barriers, since customers may lack appreciation of the value of a new
product or experience of using it. An option could be to give customers a price reduction to
lower the risk in the trial stage. Even though a lower price generates demand and reduces the
cost of volumes, there are disadvantages with lowering the price. This is because the margins
and revenues are being reduced if there is not a quicker falling cost. This is a dilemma
concerning a low price. (Calantone & Di Benedetto, 2007)
A greater understanding of earlier launches can be a foundation for development of faster
advancement towards break-even. In addition, it would also give an understanding when it
comes to superiorly controlling the programs of launch. Two reasons for a company to use a
first-rated price could be to become a leader of quality or to make the revenue to the highest
which is called skimming. (Calantone & Di Benedetto, 2007) When technological products
are being introduced, companies traditionally use strategies of skimming. This is done to
attract high-tech devoted customers that are not held back by a higher price, and is done in the
first stage of the product launch. (Ming-Hung & Kuen-Hung, 2007) If a high price is used, it
needs to be justified by another element, such as the quality of the product. Furthermore, if
the product has a benefit in competition that is being perceived and if the product is
distinguished, a price strategy of skimming would be preferred. (Calantone & Di Benedetto,
2007)
Furthermore, it is especially when the product has a benefit that is obviously unique and is
perceived as a strategy based on skimming that gives more effectiveness. (Hultink et al., 2000)
In addition, this should correspond to values and experience of customers. In contrary, the
strategy of price penetration is suitable when the cost of distribution and production can be
lowered. In such case, a position of leadership when it comes to price can be obtained by this.
This strategy, price penetration, is also suitable when barriers of adoptions and speed dispersal
need to be surmounted. (Calantone & Di Benedetto, 2007) Furthermore, the choice of price
penetration is a reason to use when the diffusion of a product probably would pursue the
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typical diffusion curve. This is because launches of the competitors’ products could be
blocked. (Hultink et al., 2000) When it comes to the diffusion curve that is the most frequently
used curve is the S-curve. This curve has been the most frequently used since it was
developed. (Bessant & Tidd, 2007) A diffusion curve concerning innovations has a shape of
an S-curve. This means that the early stages of the curve include a slow adoption process and
this is before a quick increase in speed occurs. (Rogers, 2003) The S-curve ends with a
demand that is limited and thereby has reached an area of stability. (Johnson et al., 2008) See
figure 2 below.
Figure 2 Source: Hall & Hewings, (2001) P122
The choice between price penetration and skimming is also affected by the extent of entry. In
addition, price penetration is preferred when the scale of entry is major while skimming is
preferable when the scale of entry is small. (Hultink et al., 2000) The tactical decisions
concerning price depends on the relative advantage in relation to compatibility. In a case of
low relative advantage respective low compatibility the price strategy should consist of a
price penetration strategy, in opposite to, the use of price skimming strategy while the relative
advantage and compatibility are high. The price strategy penetration is preferable when early
adopters should be encouraged as well as when diffusion should go quick. (Guiltinan, 1999)
However, there is no restriction to only choose between these two. Other factors have to be
taken into consideration by a firm. These are determination of what effect the net profit has of
lowered price, the relationships between the current profit, volume and cost, demand
stimulation and the price sensitivity of demand. (Calantone & Di Benedetto, 2007)
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3.9 Acceptance and adoption
To choose a strategy of launch, one should bear in mind how the market would accept a new
product. (Guiltinan, 1999) Customers are when they are deciding if they want to adopt a
product that is new, going through a number of stages. This process is called the innovation
decision process. (Rogers, 2003) A products features, that are of significance in this process is
the compatibility and relative advantage. (Guiltinan, 1999) The factor compatibility is
depending on the values and needs of the customers that should be matched to the products
position and also the comparison between this and the match of other products that have
earlier been tested. (Sang-Hoon & Sungjoon, 2004) Compatibility is also concerning if there
is any feeling that innovation is needed. When it comes to new-to-the-world products, the
compatibility is compared to the type of product that earlier has been used with the purpose to
meet the needs of a comparability kind. (Guiltinan, 1999) The factor relative advantage is
depending on the perceived position advantages of a product compared to position advantages
of the ideas that a new product is replacing. This is also when there is an occurring
comparison between the performance and price of the innovation. (Rogers, 2003) The
perceived compatibility or/and perceived relative advantage are what the function of the goals
concerning the demand are founded on. This is referring to an innovation. (Guiltinan, 1999)
One goal of demand is adoption. Tactical and strategic decisions drive the perceptions of
compatibility and relative advantage. Furthermore, the tactical and strategic decisions are also
being influenced with a measurement of these perceptions. The measurement consists of
product and concept testing in the chosen market. (Guiltinan, 1999) Factors that are of
significance when measuring the level of relative advantage could be satisfaction, social
prestige, terms of economics and convenience. (Rogers, 2003) Concept tests in the aspect of
relative advantage often uses measurement of the relevance or significance advantage
included in the offer as well as the new concept uniqueness that is being perceived. These
measures however, might not correspond with the perceptions made by the customers when it
comes to relative advantage. (Guiltinan, 1999) Furthermore, it is if the potential buyers
perceive the new product as beneficial that is of significance, rather than the objective benefit
the product possesses. (Rogers 2003) In the process of diffusion and adoption the relative
advantage is of most significance for the ones adopting the product early. This is while the
compatibility is of significance when it comes to the ones adopting the product later. An issue
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might be that buyers do not see the advantages in the new product and therefore the relative
advantage will not be increased. However, it is not only these parts that drive them, for
example product testing could also have an impact. The chance of getting the demand that
was intended in the launch strategy greatly depends on how the market perceives the
compatibility and relative advantage of the product. (Guiltinan, 1999)
When it comes to the effect that leads to adoption and trial, it is founded on especially the
compatibility and relative advantage. Therefore, they should be taken into consideration when
a strategy of launch is developed. (Guiltinan, 1999) The degree of adoption will depend on
how the relative advantage is perceived, if the relative advantage is being perceived as
heightened so will the degree of adoption also be. (Rogers, 2003) The management of sales
must, in order to get the wanted result, take on the product with great dedication. In addition,
when it comes to affecting buyers to buy, the sales management has a key role since they
communicate a lot with the customers. (Micheal et al., 2003) 90 per cent of the
communication is body language and only seven per cent is the vocal communication as
stated by Borg (2009).
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4. Empirical investigation
In this chapter empirical information will be looked upon and give a deeper understanding of
the case-study company WeZupport. Also studies of the qualitative interviews and the survey
will be presented. This chapter will together with the theoretical chapter lay the foundation for
the analysis of this paper.
4.1 Introduction of the case company
The case-company WeZupport is a small but rapidly growing company. The company sells
innovative solutions for having any type of digital meetings, events and lectures. It was
founded in 2003. This is within the subject to do new ways of doing business and to learn and
interact within organizations. (WeZupport – Arbeta och utbilda online, 2011)
WeZupport has the last couple of years worked with organizations with working, learning and
interacting in new ways. Their customers are mostly Swedish, and ranges from universities to
hospitals, but also to professional businesses that wants a more cost-effective interaction. The
concept digital shopassistant is a solution for businesses with webshops to give their
customers the same assistance in the digital store as in the physical store. This is through a
web based interaction which gives the customer a live communication with motion picture
and audio with the seller on the shops homepage. (Bedin, CEO, 2011)
4.2 Statement of the case company’s problem
WeZupport wants to launch a solution for improving the communication between seller and
customer on the Internet in form of a software product combined with knowledge and
information, which they will offer to other businesses. The product is called digital
shopassistant. The product contains licenses for usage of the product combined with
supporting service in means of knowledge, technical support and education. Furthermore, the
launch of this product for this market will be assigned a limited amount of financial resources.
Despite this, the company has a high willingness of taking risks. (Bedin, CEO, 2011)
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4.3 Results from the case study interviews
4.3.1 Market situation
Today this type of product does not exist in the Swedish market. According to the CEO of the
company, the reason for this is that the market is not fully mature to adopt this type of
product. However, he also states that the users of this product are indeed mature enough to use
this type of interaction support tool. Furthermore, the infrastructure needed is already
provided for the potential users. It is actually the business world that slows down this type of
development. Despite this current situation with the market being immature, in three to five
years, 75 per cent of all companies in the Swedish market will possess a solution to offer their
employees and customers to interact with a tool in some sort of way. The product that
WeZupport offers is not a demand driven product and additionally, there is currently a low
need or want for the product. WeZupport creates a new alternative to use their solution instead
of current ones due to a more personal relation towards the user than any of the substitute
solutions. The great benefit with this solution is the possibility to use body language, since
most of the communication happens through body language. In addition, current solutions
only uses less part of the communication process since they only interact with words. (Bedin,
CEO, 2011)
As CEO Stefan Bedin says, they expect a threshold stage for this specific product and when
this has been surmounted through adoptions and acceptance of major key-players, other twins
might follow. In this type of scenario, the company expects a large growth and many new
customers, but with this growth, WeZupport anticipates that other competitors will arise. If
this would be the case, the company believes that they would have several factors of
advantage through competence, experience and social capital. In this case, the social capital
refers to cooperation with large partners with which they have plans to realize in a not so
distance future. For example, these plans could involve outsourcing the sales process and also
parts of the production to gain cost efficiencies. Even though WeZupport could gain these
first-mover-advantages, they do believe that superior competitors could outmanoeuvre them
with the help of greater resources. (Bedin, CEO, 2011).
In a competitive environment concerning this type of product, it is vital to be niched to handle
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the competition in a more successful way. This is also what WeZupport intends to do. They
want to focus on a few sectors and be specialized in these to be able to grow twins from a
clearly defined target market. Within a situation of competition, they would concentrate on
what they believe would be their relative advantage. These advantages are a strong
commitment to the market, well evolved supplements to the product, cost flexible solutions
for the customer that are modified constantly, networking and insourcing in the form of
acquiring needed services around the product. (Bedin, CEO, 2011)
Uncertainties when it comes to this type of market are technological advancements and the
demand. These technological advancements are something that WeZupport faces with a quick
decision making process throughout the entire organization in order to rapidly be able to react
to changes. WeZupport expects that the demand will increase dramatically in the next five to
ten years, even though this development has been proceeding slower than they expected.
(Bedin, CEO, 2011)
4.3.2 Concerns about the product
The digital shopassistant has been tested with several homepages to see how available the
solution is to users. These were not within the segment of real internet shops but instead on
artificial homepages. Preliminary investigation has been made in a smaller scale during the
years that the company has been active. The market has also been investigated through
surveys towards the customers, information from analysis companies and information from
global players. These investigations showed that the company’s relative advantage was the
knowledge part of the product. (Bedin, CEO, 2011)
The digital shopassistants design needs to be adapted depending on which buyer is interested.
This is due to different homepages, the extent of the project and the buyers’ type of target
market. When distributing the product, the company makes sure that everything goes
comfortably for the buying company. This is since everything is distributed online. (Bedin,
CEO, 2011)
4.3.3 Introduction pricing
The product is already cost-efficient from the beginning, which allows a lower introduction
price to be offered. Furthermore, this makes the process of lowering costs not a priority for
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the company. They also want to base their sales on volume, which is also supported by a
lower introduction price. The company also says that the price penetration concept has to be
used in this early stage because of the low demand. The other choice is to try to take a higher
price from a few customers, but the company is afraid to get stuck in a complex project that
would require too much resources. A lot of extra resources would be put into a pilot sale
execution which would lead to an economic advantage for the buyer that could lower the
introduction price even lower. This advantage exists to reduce the risk for buyers due to the
threshold of maturity. (Bedin, CEO, 2011)
4.3.4 Market acceptance
The buyers could potentially skip WeZupport in the buy process and buy directly from Adobe,
which is the supplier of the product. However, with the side-services and technical support
that WeZupport offers, the risk of a scenario like this is reduced. To able to skip WeZupport
the buyers themselves needs to develop their own technical support and learning process of
the product, which is a too large and costly investment. (Bedin, CEO, 2011)
The trial stage will mainly be user-based where the major element will be a pilot where
customers will have to possibility to interact with this type of product along with the
supportive services. With this, the company wants to create a hype which could lead to a
ketchup effect where one sale could lead to many others. This one sale could evolve to an
opinion leader that WeZupport sees a key-factor of success. (Bedin, CEO, 2011)
4.4 Interviews with large online retailers relevant to the case
The interviews were done with four different respondents. In the interviews it was shown that
there were mixed feelings about this solution among the respondents.
The travelling company had a positive opinion about the solution. They argued that an
interaction with motion picture and audio is a natural development for this specific company
since they currently have a well used text based chat system. They feel that this solution
where a seller showed in motion picture is a beneficial and effective complement to their
current solution. However, the company does not know if a body language interaction would
give advantages in sales. (Pellvik, Marketing manager, 2011) Pellvik (2011) states though, it
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might be beneficial for sales. However, despite the positive point of view of the solution, the
travel company has to take into consideration the cost of the solution and how easy it is to
integrate into their currently existing support environment. Especially the technical level and
cost of the solution should both be on a low degree. Concerning the technical aspects, such as
technical support, education and servers, they would like to place as much of these services
internally in the company. The company is not especially focused on what competitors do,
instead the focus lays on what is beneficial for the customers. In addition to this, the company
would not feel pressured to use this solution if competitors would start to use it. (Pellvik,
Marketing manager, 2011)
The representative of the clothing and make up section had a slightly different view. They do
believe that, in the long run it will be obvious to have live customer support in their company
web shop, but to them it is not a given solution that the customers’ needs to see the seller. It is
nothing that they have considered as a factor of success online. They feel that there are other
elements that have a greater impact on minimising the risk and increasing the safety for the
customers, at least in their industry. They say the major benefit of a solution like this is that
the customer gets live help with a direct response. These advantages that could occur are that
the demand on customer support increases dramatically, both when it comes to profile but also
with the complexity with different languages in the live interaction. It is easier to give a
higher quality throughout the entire process with a different approach. A solution like the case
company’s could also give customers too high expectations on the answers from the seller.
They also see that it could be a problem of integrity that needs to be considered. Furthermore,
they do not find this solution of interest at the present time. However, if the company would
use this kind of solution, they do not want to maintain the supporting services themselves.
Instead they would outsource everything. If any competitors would start to use the solution,
would not affect the company’s decision of use or not to use the solution. (Anonymous
interview A, 2011)
The company representing the cultural segment did not believe that this solution would fit
their organisation. They could not identify any problems that could be solved with a solution
like the one the case company offers, but it is still something that has to be tested and the cost
versus gains has to be balanced and looked upon. They are doubtful that they could gain
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anything, when it comes to sales when having a human interaction with body language.
Instead they say that the disadvantage with a solution like this is that it could distract the
consumer. They state that simplicity is of importance. They do not feel that one should
overwork the buying flow. However, the company states that this solution could fit other types
of services or products than the ones they currently offer. In addition, they are not willing to
use this solution. However, the company would prefer external help in form of technical
support, education and servers if they would in the future want to use this solution. This is
because they do not want to occupy their own resources. In the case of a competitor starting to
use this solution, the company would not feel pressured to start to use the solution themselves.
(Hallgrim, Market manager, 2011) Hallgrim (2011) state though, that they are evaluating the
option to have some kind of interactive chat for specific parts of the web site where they
know that the customers have a lot of questions.
The company that sells technological products did believe that this solution could be useful in
some situations. The company states that it should be a possibility to choose to interact with a
seller online and live. As for the increased advantage from the body language the company
does not believe that it would give them any benefits. They state that in this case the customer
needs to see the entire person which would not have a large impact. The representative for the
company does not believe that this solution would increase their sales. However, as a
customer service support the representative thinks it would have a purpose. This is when their
current chatting system would be developed and thereby they see this solution as a possible
upgrade. (Thor, Aftersale, Customer Service Manger, 2011) Thor (2011) states, if Siba AB
would try this kind of solution, they want it to be sold in a package with technical support,
education and servers but this could differ due to which company that wants to start using it.
As for Siba AB, they want to outsource everything except the personnel. The company would
not feel pressure to start using this solution if competitors would do that. They say that it
would be interesting to see this kind of solution implemented on a company web site. (Thor,
Aftersale, Customer Service Manger, 2011)
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Age of respondents in per cent
0,5
64
28
7
0,5
Under 1818-2425-3435-5455+
4.5 Survey answers The number of responses that were gathered was 250. Among these responses 57.5 per cent of
the population was female while 42.2 were male. The overrepresented age group of the
respondents was in the age group 18-24 years, where 64 per cent were between 18 and 24
years. The second largest group was 25-34 years old. The two different groups, 35-55+ and
under 18, were together eight per cent. This is showed in diagram 1.
Diagram 1
99 per cents of the respondents had shopped on the internet one or more times. The majority
that had shopped online was women. Concerning how satisfied customers are in physical
stores, 55.7 per cent said that they were satisfied. 31.3 per cent stated that they were neutral.
10 per cent were very satisfied and only 5.6 per cent were dissatisfied or very dissatisfied.
Furthermore, the survey showed that 63.4 per cent were satisfied with the service in a web
shop. In the opposite, it was 4.9 per cent that were dissatisfied. The rest of the respondents
were neutral or did not want to take side for the level of perceived service.
It emerged several important phrases among the respondents in the open questions. Two of the
most significant arguments for using the digital shopassistant is the following about service
regarding online retailing: “It is not really any special service, but more to click, fill in
account number and then it is done. It is would be needed something else in order for me to
shop more online” and “lack of personal assistance face to face”. Some other phrases that
appeared more than others are stated below as a summary.
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Table 1: Summary of the respondents answers
Pro Con
Physical store
“Good service when you ask, sometimes you have to wait for sellers though.” “You can check the product and also get an explanation from the seller but it takes time.” “I can ask questions directly to the seller.” “It depends on what store but the workers in the shop are mostly friendly.” “Non-clarities may be handled at once.”
“The level of competence in store employees is often disturbingly low.” “The sellers often don't know what they are talking about.” “Cold staff sometimes.” “The personnel mostly stay behind the counter. Feels like I disturb them if I ask something.” “You usually get the help you need but not more then that.”
Web shop
“Easy and saving time.” “If I have questions they always answer them.” “When being in a physical shop I expect a higher degree of service than when I shop in a web shop. It is often cheaper and I find it okay to do more of the work myself and get less service.” “I find it comfortable to shop online from home and get the products delivered to my home.” “Often cheaper, and you have the feeling to control the situation, to not pay useless services.”
“Hard to know about the goods when you only have a short description and a small picture. A lot of reading about the deals and rules regarding repurchase for example.” “Non-personal. Not possible to get GOOD advice about problems.” “It’s often harder to get help, usually you get a lot of information but if you got a specific question you must call customer service, which can mean a lot of waiting.” “Cannot say that there is any special service except an e-mail address you can mail to if there is any concerns. Some has telephone numbers and I think that is very important.” “Sometimes I can miss the contact with the staff.”
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The importance of the seller
010203040506070
Important Not important Don'tknow/neutral
Degree of importance
Per
cen
t ClothingTravel Technology Culture
58.2 per cent of the respondents stated that they have not encountered an automatic shop
helper Avatar. 31 per cent of the respondents did not know if they had encountered an Avatar.
Furthermore, 12.9 per cent of the respondents stated that they have encountered this support.
In addition, the ones that answered yes had answers of disparity when it comes to the
satisfaction of the Avatar. 26.2 per cent was satisfied while 26.2 per cent were not satisfied.
19 per cent answered they were very dissatisfied with this solution. In the opposite 9.5 per
cent stated that they were very satisfied with the Avatar. Within this group of respondents,
40.5 per cent thought this solution was easily used, while 35.7 per cent did not think this
solution was easily used.
In the segments of cultural products and travels, the respondents were majorly satisfied with
the service in these two industries. In the other two segments, clothing and make up and
technology, the respondents were not as pleased with the service. Very few of the respondents,
19.5 per cent, thought that a personal contact with a seller in online shopping is needed in the
segment clothing and make up together with cultural products. This is while 59 per cent did
not feel the need for a personal contact with a seller in online retailing. 80.1 per cent of the
respondents do believe that extensive information about the product is vital for these
segments. Concerning the remaining segments, technology and travel, 87.8 per cent of the
respondents felt that they needed information about the products. Furthermore, the
respondents that needed personal contact on the web based shop were 42.1 per cent. In
opposite to this, 38 percent did not feel they needed to communicate directly with a seller
through Internet.
Diagram 2
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37.6 per cent of all the respondents believed that interaction with a seller urges them to buy
more than without the interaction. This is while 49.8 per cent do not believe this interaction
urges them to buy more. When it comes to the segment clothing and make up, 23.7 per cent
believed that the interaction with a seller is important when buying these products. This is
while 46 per cent do not believe an interaction with a seller is important. The numbers when
concerning traveling was 44.2 per cent respective 29.2 per cent. For technology the authors
could see that 56.8 per cent believed that the interaction was important while 19.2 per cent
believed it was not. For the last segment, culture, the numbers were 11.1 per cent respective
62.7 per cent. This is showed in diagram 2 above.
4.6 Summary of empirical investigation
Case
company
The case company states that the business world is not mature for this kind of
solution. However, the end users are.
Market
maturity
Cultural
products
Travel
company
Technology
company
Clothing and
make up Survey
Cultural
products Not mature
Not fully
mature
Travel Mature More mature
Technology Mature More mature
Clothing and
make up Not mature
Not fully
mature
Here it is shown the summary of the empirical investigation. The segments that are mature
enough to use the case company’s solution are the travel and technology segments. It is even
in these areas that the end users are more mature to accept this kind of solution. In opposite to
this, the end users are not fully mature to use this type of solution in the segments of cultural
products and clothing and make up, which is corresponding to that the business within these
areas also are not mature for the case company’s solution.
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5. Analysis
In this chapter the theoretical framework and empirical investigation will be the foundation
for the analysis. Similarities and dissimilarities will be shown in this chapter and this analysis
will bring forth a conclusion.
5.1 Launching a new-to-the-world product
A product that is new to a company and a market is called a new to the world product.
(Augusto & Coelho, 2009) This type of product is corresponding to the case company
WeZupports product digital shopassistant since this type of product does not exist in the
Swedish market. As Guiltinan (1999) states, when launching this type of product a company
needs to construct a primary demand. This is also correlates to WeZupport since they want to
launch this type of product. Furthermore, when launching this type of product, the adoption
phase will not go fast, as it is stated by Guiltinan (1999). This is corresponding to what the
case company said about the launch of this product being executed in a long perspective since
they have a threshold to surmount before the diffusion takes a faster pace. As Shoham &
Ruvio (2008) claims, it is the opinion leaders that increase the width of the diffusion. This is
indeed related to WeZupports intentions of trying to create opinion leaders. In fact, the case
company even sees these opinion leaders as a key factor to success that can help to create
twins.
The capital of technological and social as well as market characteristics are what launch of
innovative products depends on. (Ming-Hung & Kuen-Hung, 2007) The social capitals found
in the case company were partnerships concerning the product and sales. These partnerships
could involve outsourcing the sales process and the production. Another social capital the
case company possesses is the relationship with their supplier Adobe. The case company
possesses technological capabilities in form of technological knowledge and technical
support. The characteristics of the market in this case, are a situation with no current
competitors and a growing market. Though, the case company states that 75 per cent of all
companies in the next three to five years will possess some sort of solution where employees
and customers interact. According to Ming-Hung & Kuen-Hung (2007) the competition will
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become more aggressive when the acceptance of the market increases. That competitors will
emerge as the market grows is indeed something that WeZupport expects. A unique
arrangement of distribution, as Beard & Easingwood (1996) states, is a vital factor for
launching high technological products successfully. This is also the case for WeZupport since
they distribute their product in a simple and comfortable way due to the online distribution.
The case company is launching a new-to-the-world type of product, the digital shopassistant,
and is taking the position of a leader. Their situation of educating the market and high cost is
corresponding to the statement from Guiltinan (1999) about high cost of educating the market
when being the leader. However, the case company has a limited financial resource; in a case
like this it is not recommended by Kalyanaram et al. (1995) to be the first-mover. Even
though, Kalyanaram et al. (1995) recommends a company to be the first-mover when their
risk willingness is high and this is in correlation with WeZupports risk willingness. The case
company believes that they will have an advantage in a scenario of competition concerning
their strong commitment to the market. Also cost flexible solutions that constantly are
modified for the customer is a relative advantage. There are cases when competitors with
superior resources outmanoeuvre the first-mover. (Liang et al., 2009) This is something the
case company does believe could happen due to superior competitors greater resources.
According to Hultink et al. (1997), the strategic decisions concerns the questions why, when,
where and what. The first question, why, is answered by the case company’s statement that
they want to increase the communication on the Internet between seller and customer. As for
when, the company sees that the end users are mature enough for this type of solution, while
the business world is holding the development back. Despite this, WeZupport is confident in
trying to launch the digital shopassistant in the present time and sees a major growth in
demand the next three to five years. Where means here, that the company will launch the
product on the Swedish market. Concerning what to do, this should be summarized in a
launch strategy plan. The case company states that they will be concentrated into a niched
market, which is also a strategic decision according to Calantone & Di Benedetto (2007).
When it comes to the case company’s situation of being cut off from the buying process
between the customer and the company’s supplier, Adobe, the company feels that the risk of
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being cut out is relatively low. This is since the knowledge and support they offer is costly to
replace. Porter (1980) states, that when power of buyers is high, there is a chance for a
backwards vertical integration to occur. In the qualitative interviews with online retailing
companies, it was shown that the travel company wants to do as much as possible internally.
This means that the power of buyers in this segment is relatively high. The other three
segments would prefer external help with the support service connected to the product and
thereby the power of buyers is not high. In addition, for a backwards vertical integration to
occur is not a major risk for WeZupport, except in the travel segment. Calantone & Di
Benedetto (2007) states, that the demand of the market and technology can be uncertainty
factors for a company. In our case company’s situation, the market uncertainty is relatively
high. This is because the company expected the diffusion process to go more rapidly than it
has done. Even WeZupport feels that the technology is an uncertainty factor, which would,
according to Augusto & Coelho (2009), force the companies to have a quick decision making
process. This is indeed corresponding to the current situation in the case company.
5.2 Relative advantage and compatibility
When comparing the digital shopassistant with current solutions, the case company’s product
makes use of more than 90 per cent of communicating because of the included use of body
language. This is while the current solutions only use seven per cent of communication due to
no body language interaction. (Borg, 2009) Thereby, the relative advantage should be
perceived as high. However, the qualitative research in this study shows that the majority of
the respondents did not find the use of body language vital when interacting with a seller
online. As Guiltinan (1999) states that if the buyers do not perceive this advantage, the
relative advantage will remain low. This is also corresponding with Rogers (2003) statement
that it is the perceived advantage by customers that is of significance and not the objective
advantage that the product contains. Therefore, the product digital shopassistant suffers from
low relative advantage.
Rogers (2003) says that the degree of adoption will be heightened when the relative
advantage is perceived as heightened. This is not the case for the case company since they
consider the adoption process is going slower than expected. The relative advantage is also
depending on the relation between the performance and price on the new product. (Rogers,
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2003) This is corresponding to the statement that the travel company made when they said
that the advantage of this performance had to be in correlation to the cost of the solution. As
Guiltinan (1999) claims that when measuring the relative advantage in concept test, the
concept uniqueness could be one factor that could be measured. In the product test that
WeZupport has performed, the perceived uniqueness of the product, knowledge, is what was
perceived by others.
As the survey showed, 55.7 per cent of the respondents were satisfied with the service in a
physical store. A popular reason among the respondents on why they were satisfied was the
impact of the employees. The impact of employees as a perceived advantage made by the end
users of, digital shopassistance, should make the relative advantage of this solution high, for
the end-users. This is also referring to the case-company’s customer’s point of view, this is
since Micheal et al, (2003) states, that sales management has a key role, when it comes to
affecting buyers to buy, due to the communication that occurs between them. This is also in
relation to the survey answers of the positive view of employees. This is since many answers
of pro in physical stores was about the integration with a seller when further explanations
about products and when non-clarities could be handled directly. The positive view of
employees is wanted in the web stores since many survey answers of cons in this retail area
were about the lack of employees. This should increase the relative advantage for the case
company’s primary customers and this is due to the communication that the digital
shopassistance offers and the perceived positive picture of employees made by the end users
is increased.
However, the answers in the survey also showed that cons in a physical store was due to
employees, at the same time pros in a web store was due to the employees not interacting as
in a physical store. This means that the relative advantage is not necessarily high. The
company of the segment cultural products does not agree completely with the statement from
Micheal et al (2003). This is since the company states that one should not overwork the
buying flow. This is corresponding with the results of the survey, where only 37.6 per cent of
the respondents felt that they urges to buy more when interacting with a seller, while 49.8 per
cent of the respondents do not. According to this, the statement that Micheal et al (2003)
makes, do not correlate completely. Therefore, the relative advantage, when it comes to
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affecting buyers to buy, remains low in the point of views of the case company’s primary
customers.
In fact, even though the majority of the respondents of the survey stated that they were
satisfied in a physical store because of the employees presents, an even higher majority of the
respondents were satisfied with the service in a web store. Indeed, 63.4 per cent were satisfied
in contrast to 55.7 per cent that were satisfied in a physical store. Popular phrases among the
respondents concerning the reason for being satisfied with the service in a web store, was that
the level of service had a lower threshold of acceptance due to the possibility of a lowered
price. As the company representing the clothing and make up segment states, the presents of
an employee would raise the customers’ expectation of the sellers’ answers in a web store.
Furthermore, the company representing the segment of cultural products, states that customers
concerning the Internet shop area, appreciates simplicity. This is corresponding to one of the
most popular phrases made by the survey respondents, that they were satisfied with the
service on web stores because it was easy.
Since the majority of the respondents of the survey were indeed satisfied with the present web
based service, in fact they were even more satisfied than they were with the service in a
physical store the need for a new solution is not necessarily high. This is since the need of an
innovation in this area is relative low; therefore, the compatibility for the digital shopassistant
is low. However, 42.1 per cent of the survey respondents felt a need of personal contact with
an employee on web based stores in the segment of technology and travel. Therefore, there is
a need for this service in these segments, even though compatibility is relatively low. When it
comes to the need of personal contact, in the segments cultural products and clothing and
make up, even fewer respondents felt a need, compatibility is even lower. Furthermore, the
results of the survey showed that the majority of respondents thought that an interaction with
a seller is the most important in the segment technology and travel. In the other two segments,
clothing and make up and cultural products, the majority did not believe an interaction is
important when buying these products. Therefore, the compatibility, need, for this solution is
the highest in the segments travel and technology.
When it comes to a currently automatic shop helper online, as for example an avatar, 45.2 per
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cent of the respondents of the survey were dissatisfied or very dissatisfied with this service.
This is while 35.7 per cent were satisfied or very satisfied. In this relation, there is a need for a
more satisfying solution of a shop helper. Because of this, there also exists a relative high
compatibility. If automatic help is not enough, a direct communication could be a more
beneficial alternative, and in such case, the relative advantage should be in relation to current
solutions of automatic helpers’ relative high. However, as the majority of the case company’s
potential customers do not see the relative advantage to be high, it will remain low. This is
corresponding to Guiltinan’s (1999) statement that, relative advantage would not be increased
if buyers do not see the advantage of the new product. This is corresponding with the case of
WeZupport, since the qualitative interviews with their potential customers, showed that it is a
relatively low need or want for the product. In addition it also corresponds to the statement
the case company makes, that their product is not a demand driven product.
As Guiltinan (1999) states, a major decision is to decide between the choice of targeting the
entire market or selecting a niche to focus on. This is corresponding with WeZupport’s case,
where they state that they will focus on a few segments and become specialized in those. This
is something that the case company does in order to, in a successful, way handle the potential
future competition. To have expertise about the chosen segment in order to create a
competitive advantage is correlating to the theory of segmentation. (Croft, 1994) According to
Guiltinan (1999), a new product is often targeted towards the customers that most likely
would appreciate the products advantage. In the case company’s situation, this type of
solution should be targeted towards the segments of travelling and technology. This is since
the survey, of the end users, showed that the need of a direct contact with a seller is highest in
those segments. Furthermore, the travelling segment, believed this type of product was a
natural development for their current solution. Also the technological segment thought that
this solution could be an upgrade for their current solution.
Guiltinan (1999) states, it would be preferable for a product that possesses a powerful
perception of relative advantage and great compatibility to target towards the entire market.
However, this is not corresponding with case company’s situation since relative advantage
and compatibility are relatively low. For the case company, the choice of segmentation is
strengthened from the statement by Croft (1994), who says that resources are being wasted if
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some needs are not being satisfied to the fullest in situations of targeting towards the entire
market. Since the need for this solution is low in the segments of cultural products and
clothing and make up, resources would be wasted if targeting those segments as well.
Therefore, to use the segmentation strategy for the case company is preferable, which is also
corresponding with the mentioned theoretical statement above.
According to Guiltinan (1999), the benefits of being the first-mover would be increased when
the acceptance of the market goes more rapidly due to an increased relative advantage and
compatibility. However, in the current situation of the case company, the relative advantage
and compatibility are relatively low; therefore the acceptance of the market will not go rapidly
and the benefits of being the first-mover would not be increased. Guiltinan (1999) states that a
product should be kept secret until launch when the relative advantage is low and the
compatibility is high. This is not corresponding with the case company since the compatibility
is relative low. However, the case company does not state that they want to keep the product
secret, which is corresponding to the previous statement by Guiltinan (1999). Furthermore,
Guiltinan (1999) claims that pre-announcing a product in order to create hype could be done
when the compatibility is low and the relative advantage is high. In WeZupport’s case, the
compatibility is low and the relative advantage is in most cases not high, so the statement the
company makes about the want of creating hype is not preferable. However, the relative
advantage is increased, even though it is not a very high advantage, in the cases of travel and
technology segments compared with the other two segments. Therefore, hype could be
preferable for the case company, if it would target towards those. According to Guiltinan
(1999), hype helps the acceptance of new standards. This reason for hype is in favour for the
case company, since there is an immature market; an acceptance of new standards is indeed
needed.
5.3 Price
According to Calantone & Di Benedetto (2007), the price could be reduced in order to lower
the risk in the trial stage when barriers based on adoption exist. This is in correlation to the
case company’s situation since they stated that they offer economical benefits in the trial stage
of the pilot to the once taking it on. Furthermore, WeZupport experience the barriers of
adoptions to be the case for them. Calantone & Di Benedetto (2007) states, it is a dilemma
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concerning lower prices. In the case of WeZupport, this dilemma is not a major concern. This
is since the company states that they are already cost-efficient from the beginning and that
lowering costs is not a priority for them. They want to base their sales on volume, so reducing
the cost of volumes is in their interest.
Calantone & Di Benedetto (2007) states, price penetration is suitable when distribution and
production costs can be reduced. WeZupport states that they are cost efficient and the
comfortable distribution over online arrangements strengthens their decision of using this type
of price strategy. Furthermore, Calantone & Di Benedetto (2007) states that a price leadership
could be obtain by low distribution and production costs. The case company sees themselves
already being costs efficient from the beginning and they are continuously looking for ways
of cutting costs for their customers and this gives them good presumption to become a price
leader. Calantone & Di Benedetto (2007) states that price penetration is suitable when
surmounting is needed, concerning barriers of adoption and speed dispersal. This is
correlating to the statement that the case company made about the threshold of maturity that
need to be overcome, as well as the statement about that the process is going slower than what
they expected. Thereby a price penetration strategy is preferred.
Rogers (2003) states, that innovation should follow an S-curve diffusion pattern. The case
company states that there is threshold stage in the beginning, due to an immature market,
which makes the adoption phase go slow. When this threshold has been surmounted, the
company expects other twins to follow, and a ketchupeffect could emerge. This ketchupeffect,
would represent a rapidly growing phase in the diffusion process. Thereby, the case
company’s product expects to follow a diffusion pattern of an S-curve. Hultink et al., (2000)
states that a reason for execute a price penetration strategy is when products probably would
follow a typical diffusion curve in the process of diffusion. This is the case for WeZupport and
thereby a price penetration strategy is corresponding. However, none of the online retailing
companies felt pressured to start using the solution that WeZupport are offering if competitors
would start using it. Therefore, the statement that WeZupport makes, about an S-curve pattern,
is not strengthened by the qualitative interviews and the ketchupeffect may not occur.
Hultink et al, (2000) states, that price penetration is preferable when the scale of entry is
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major. In the case of case company’s situation, the scale of entry is not major, since they
expects to get acceptance from a few major key players, in order to make other twins follow,
therefore a price penetration is not corresponding. When the scale of entry is small, a price
strategy of skimming would be preferable. (Hultink et al., 2000) This is not corresponding
with the case company’s choice of introduction price. However, Guiltinan (1999) states that a
strategy of skimming is preferable when the relative advantage and compatibility are high.
The case company’s product is, according to the majority of the qualitative interviews of their
potential customers, not possessing a high relative advantage and compatibility. Therefore, a
skimming strategy is not to be preferred. Despite this, the travel company and the technology
company were relatively positive to this solution and a skimming strategy could be executed,
if it would be justified with the perception of the quality. However, the survey showed that it
was a relative low compatibility, since 42.1 per cent of the respondents felt a need of personal
contact in these segments. Therefore, the skimming strategy is not preferable, since the
demand from the travel company and the technology company is in relation to the end-users.
Between the four segments of online retailing, the highest relative advantage is in the
segment of technology. This is since the majority, 56.8 per cent of the respondents felt that the
interaction with an employee was important when buying this type of product. However, only
42.1 per cent, felt a need for this solution, which would make the compatibility relative low.
This is founded on that the per cent is not relative high, even though it is barley higher than
the per cent respondents that did not feel a need for personal contact for online shopping.
Therefore, relative advantage and compatibility are both low, and price skimming is not
preferable in this segment. Furthermore, Ming-Hung & Kuen-Hung (2007) states that a price
strategy of skimming is preferable when the customers are not held back by higher prices.
However, the company representing the travel segment stated that despite the advantage with
the product, they need to take in the cost in consideration. This means that the travel company
indeed could be held back by higher prices; therefore, a price strategy of skimming is not
preferable in this segment. Guiltinan (1999) states, a strategy of price penetration could be
preferable when the relative advantage and compatibility are low. The survey showed that the
compatibility for this segment is low; it also showed that only 44.2 per cent of the respondents
felt that it was important to interact with a seller when buying this product; thereby the
relative advantage is relative low. In relation to this, a price penetration strategy in this
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segment is preferable.
The case company states that they will use a price penetration strategy as the introduction
price. However, this is not corresponding to the statement made by Ming-Hung & Kuen-Hung
(2007) that states that a strategy of skimming traditionally is used when launching
technological products. The case company’s products’ unique benefit, of a more interactive
tool that embraces the body language, is not being perceived as a high relative advantage.
Therefore, the skimming is not preferable for the case-company. Calantone & Di Benedetto
(2007) states, when using a strategy of a higher price, it needs to be justified with another
element, for example quality. If the case company would target the travel or the technology
business segment, who thought this advantage of the product as positive and a natural step in
their web based stores, a skimming price could be preferable if the customer in this case
would perceive that the quality of the product is being justified with the cost of it.
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6. Conclusion
In the conclusion, major conclusions drawn from the analysis is presented. Furthermore, an
answer is given for the research question.
6.1 Major conclusions
One conclusion is that companies launching a new-to-the-world product need to construct a
primary demand. Furthermore, this type of product is facing a slow adoption phase in the
beginning of launch. Social capital is also a key element for a successful launch. When it
comes to choosing to be a first-mover or not, the risk willingness and financial resources are
of significance. However, a company with limited resources concerning the product can aim
for becoming the first-mover as long as the risk willingness is high. The next conclusion to be
drawn is that being a first-mover will not necessarily be a persistent advantage, due to
superior competitors. Companies can try to create opinion leaders to accelerate the velocity of
diffusion.
The next conclusion to be drawn is that a product’s relative advantage is depending on the
subjective perceptions and not objective advantages. Furthermore, the relative advantage is
depending on the performance and price. A conclusion that could be drawn is that the sales
managements’ key role of affecting buyers to buy is not empirically validated in this study.
One additional conclusion that can be made is that the majority of customers do not get urged
to buy more when interacting with a seller in the case of the survey. Furthermore, using body
language in the interaction of online retailing is not vital for the segments of cultural products
and clothes and makeup. In relation to this, one conclusion is that the travel segment thinks
positively of this solution, as long as it is justified with the price. Another conclusion is that
the most want for this type of product of the end users is indeed in this segment, but the
highest demand is in the segment of technology. In fact even the segment of technology
thought positively of the solution digital shopassistant. The current solution of automatic shop
helpers, is not being seen as fully satisfying, thus, there is a possibility that a new solution
could increase the satisfaction with the support.
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An additional conclusion is that new products should target those segments that probably
would appreciate the products advantage. The timing of launch depends mostly on the
maturity and needs of the market. A market can be ready for the product, but retailers and the
business world might not be. This is an issue that has to be taken into consideration and
therefore compatibility is an important aspect to keep in mind. To lower the risk for the
customers, when it comes to buying a product, price reduction can be made. For companies
that are cost efficient form the beginning, the price dilemma of lower price is not a major
concern. Price penetration is preferable when adoptions barriers and speed dispersals is
needed to be surmounted as well as when the diffusion of the S-curve is expected to be
attained. Another conclusion is that price penetration is not necessary to be chosen when the
scale of entry is major, as the price penetration can be executed in a small scale of entry.
Therefore, an execution of skimming with small scale entry is not empirically validated in this
study. The price strategy when launching technological products can be price penetration.
This makes the price strategy of skimming that is traditionally used when launching this type
of product not empirically validated in this study.
The research question for this paper is “When trying to launch a new-to-the-world product in
a successful way, how should the launching plan be designed?”
The conclusion to this is that companies have to take into account adoption and diffusion
process, segmentation, price, timing, power of buyers, relative advantage and compatibility
when creating a launch plan for a new-to-the-world product. Also if first-mover-advantage
could be realized should be taken into consideration. This is due to the research showing that
these different factors have a great impact when a product needs to be launched.
6.2 Resubmitting to the control variables
The control variables used in the survey was age, gender and if the respondent has shopped
online. The control variable age was not met since the age group under 25 had more often
shopped online than the age group above which is not the case in the entire population. When
it comes to the control variable gender, it was not met. This since the majority of the
respondents that had shopped online was women. Even the last control variable, shopped
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online, was not met this is since the survey answers to a larger extent had shopped online than
the population. The fact that the variables was not met is due to the comfort sampling and
when doing the survey over the internet, the authors lost some control over the respondent
age, gender etcetera since anyone could answer it. Since no one of the control variables was
met, we will not be able to indicate trends to the entire population which the authors do not
aim for but instead light was shined upon the subject.
6.3 Concerning further research
This research the resources were limited. With increased recourses, a more extensive research
can be done. When collecting the empirical, it can be an advantage to include more companies
into the study to get a broader perspective. The subject of launch has not been extensively
researched and research has only been performed since the beginning of the 1990’s, therefore
more in-depth research with more resources can generate new theories. This subject has a
very small group of authors that continually researches, which can give an influenced
research. By more people shining light upon this subject, more views and aspects can arise,
which could contribute to a broader understanding of the concept launch.
The information in this paper could be used as secondary information for further research if it
would contribute to evolving the subject.
6.4 Self critics
The major disadvantage with this paper is the lack of generalization due to a comfort
sampling. Furthermore, the choice of the population in the survey sample was not preferable
for this research. This is since the majority was younger than what the control variable
recommended. Another disadvantage with this chosen population is that the number of men
and women was not equal; this means that result of the survey, that woman shopped more
than men, may not be a fair picture of reality since it was to a larger extent women that
answered.
6.5 Recommendations
A recommendation that can be made is that the case company should use segmentation of the
market. Since the relative advantage and compatibility are the highest in the segments of
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technology and travel, these areas should be focused on. One additional recommendation that
can be made is that the relative advantage and compatibility of this type of solutions is
relative low and therefore this type of solution should have an introduction price of price
penetration. In the case company’s situation, the power of buyers is not high except in the
segment travel.
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Homepages
WeZupport – Arbeta och utbilda online http://www.wezupport.se/om-oss/historik/ (2011-03-22)
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Anonymous interview A (2011-05-16) (2011-06-09) Bedin, Stefan. CEO, WeZupport Sweden AB (2011-03-22) (2011-05-11) Hallgrim, Mattias. Market manager, Ticnet (2011-05-16) (2011-06-08)
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Pellvik, Claes. Marketing manager, Ving Sweden (2011-05-17) (2011-06-07) Thor, Teddy. Aftersale, Customer Service Manger, Siba AB (2011-05-24) (2011-06-07) Reports
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Appendix
Appendix 1 - Operationalization of interviews with the case company The interview took place through a web-meeting room that the case company hosted. The
questions consisted of major topics that included several smaller questions directly derived
from the theory chapter. The respondent answered very flexible and thorough and could
elaborate on what was of greater significance for the company. The questions that were asked
were the following:
1. How do you classify the product concerning type of newness? (Theory: new-to-the-world products in Augusto & Coelho, 2009) 2. Do you try to create opinion leaders who act as ambassadors for the solution? (Theory: opinion leaders and diffusion in Shoham & Ruvio, 2008) 3. Have you done any pre-investigations of the market? (Theory: compatibility in Guiltinan, 1999) 4. Have you done any product test? (Theory: relative advantage and compatibility in Guiltinan, 1999) 5. Do you feel that you have any relative advantage over the present solutions? (Theory: relative advantage in Rogers, 2003) 6. Do the customers perceive these advantages? (Theory: relative advantage in Guiltinan, 1999) 7. How would you price the solution, through skimming or price penetration? (Theory: skimming and price penetration in Calantone & Di Benedetto, 2007, Hultink et al. 2000, Ming-Hung & Kuen-Hung, 2007 & Guiltinan, 1999) 8. Do you plan any changes concerning the price in order to increase the demand? (Theory: lower risk, trial stage in Calantone & Di Benedetto, 2007) 9. How would a low price/high price affect the result, can high/low costs affect, can the costs be lowered over time? (Theory: price dilemma in Calantone & Di Benedetto, 2007) 10. What kind of strategy have you planned for the launching in the aspect of when, where and how? (Theory: strategic and tactical decisions concerning launch in Hultink et al.,1997) 11. Do you want to target a niched market or a mass market? (Theory: strategic decisions and segmentation in Guiltinan, 1999 & Croft, 1994)
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12. How do you feel the timing for launch is right now? (Theory: time of launch in Calantone & Di Benedetto, 2007) 13. Do you plan for a quick or a long-term launch? (Theory: time of launch in Guiltinan, 1999 & Calantone & Di Benedetto, 2007) 14. Do you want to create hype before a potential launch? (Theory: hype in Guiltinan, 1999) 15. Do you feel that your solution is new enough to take advantage of first mover advantage, and to what extent? (Theory: first mover advantage in Guiltinan, 1999, Kalyanaram et al., 1995 & Liang et al., 2009) 16. Could you as a middleman be excluded from the sales process? Why/why not? (Theory: power of buyers in Porter, 1980) 17. Are there any potential uncertainty factors with this launch? (Theory: uncertainty of technology and the market in Calantone & Di Benedetto, 2007) 18. What kind of strategies do you use to avoid this? (Theory: uncertainty of technology in Augusto & Coelho, 2009) 19. How do the market and potential growth appear? (Theory: adoption, diffusions and market acceptance in Johnson et al., 2008, Ming-Hung & Kuen-Hung, 2007 & Guiltinan, 1999) 20. Do you have any social capital in the form of alliances, reputation and joint-venture? (Theory: social capital in Ming-Hung & Kuen-Hung, 2007 & Easingwood & Harrington, 2002)
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Appendix 2 – operationalization of interviews with large online
retailers relevant to the case The interviews were conducted through e-mail. All the respondents were head of marketing at
their respective firm. These interviews were conducted to strengthen the case study and also
to see where it exists a potential demand. In the e-mail conversation the respondents got a
detailed description of the product from the case company.
1. Do you feel that anything would be gained through using a live interaction between the
seller and a customer on your online retailing website? Why/why not? (Theory: relative
advantage and compatibility in Rogers, 2003)
2. Do you see that the integration of body language could contribute to increase sale?
(Theory: relative advantage in Rogers, 2003, Guiltinan, 1999 & Borg, 2009)
3. What do you feel would be the advantage and disadvantage with this solution? (Theory:
relative advantage in Rogers, 2003)
4. Would you consider this type of solution for your online retailing? (Theory: compatibility
and segmentation in Guiltinan, 1999 & Croft, 1994)
5. If you would chose to use a solution like this, would you consider maintaining your own
service of the product (technical support, education, servers’ et al.) or would you prefer a
solution where you get help with this from an external part? (Theory: power of buyers in
Porter, 1980)
6. If any/some of your competitors would start to use this solution, would you then feel
pressured to also use it yourselves? (Theory: S-curve in Rogers, 2003)
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Appendix 3 – operationalization of the survey The survey followed a strict way of conduct and was distributed through social media and e-
mail. The respondents were chosen through a comfort sampling. The survey is an
investigation for how potential users would accept this type of solution.
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Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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Lina Bengtsson 891221 Linnæus University Kristian Gjurovski 880718 VT11 Examiner: Mosad Zineldin Desirée Valler 880405 Tutor: Sarah Philipson
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Relevance:
Question one to three are easy questions to answer and also familiar to the respondents. The
questions four to nine refers to compatibility in Sang-Hoon & Sungjoon (2004) and relative
advantage in Rogers (2003). The questions ten to twelve refers to the theory about relative
advantage in Rogers (2003), compatibility in Sang-Hoon & Sungjoon (2004) and
segmentation in Guiltinan (1999). Question 13 refers to the theories of the role of sales
management in Micheal et al. (2003). Question 14 refers to the theories relative advantage in
Rogers (2003), compatibility in Sang-Hoon & Sungjoon (2004) and segmentation in Guiltinan
(1999).
Linnæus UniversitySE-391 82 Kalmar/SE-351 95 VäxjöTelefon 0772-28 80 00
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